Romania Infrastructure Report

About This Report

Abstract:

We revised our ---- construction sector growth forecast downwards to -.- on the back of weaker than anticipated Q--- data. The transport sector will be hardest hit and we have downgraded our growth outlook for the sector to -.- from -.- . ...The transport sector will be hardest hit and we have downgraded our growth outlook for the sector to -.- from -.- . We expect a slight uptick in transport sector growth in ---- as EU funding inflows resume and have accordingly revised our growth forecast upward to -.- Positive housing data indicating a steady growth in issued building permits as well as a brightening macroeconomic outlook for Romania underpins our expectation residential construction will emerge as the outperformer in ----, with growth projected at -.- this year and annualised average growth over the next five years anticipated to be -.- . The ongoing anti-corruption drive continues to gather pace in Romania, with the technocratic government of Dacian Ciolos prosecuting more than -,--- individuals last year. ...The ongoing anti-corruption drive continues to gather pace in Romania, with the technocratic government of Dacian Ciolos prosecuting more than -,--- individuals last year. While the initiative has the potential to improve Romania s business environment over the long term, in the short term we have seen it have a negative effect on infrastructure growth, as public officials remain wary of possible corruption charges and are therefore less likely to move ahead with tendering opportunities and financing decisions.

...We have revised our ---- construction growth forecast down to -.- from -.- to reflect a significant slowdown in real y-o-y construction growth in Q---. We have made a more substantial cut to our forecasted infrastructure growth rate, from -.- to -.- , as EU funding inflows enter a temporary lull and thereby negatively impact investment levels in a sector heavily dependent on continued EU support. ...We have revised our ---- construction growth forecast down to -.- from -.- to reflect a significant slowdown in real y-o-y construction growth in Q---. We have made a more substantial cut to our forecasted infrastructure growth rate, from -.- to -.- , as EU funding inflows enter a temporary lull and thereby negatively impact investment levels in a sector heavily dependent on continued EU support. We expect residential construction to emerge as the clear outperformer with a ---- growth rate of -.- , as the sector remains supported by beneficial macroeconomic trends and positive housing data in H---. On June --, the government decreased VAT on agricultural services, its third such cut in the last -- months. The decision is emblematic of the government s ongoing policy of decreasing VAT in the run up to the ---- elections and one which will further exacerbate a decline in government revenues, which in turn will preclude the government from allocating additional resources to infrastructure projects.

...BMI View: Although construction growth will slow in ---- on the back of a weaker than expected first quarter, Romania s construction sector growth will nevertheless outpace the European average over the next five years as EU funding inflows seek to alleviate the country s significant infrastructure deficit. An improving macro-economic climate and expansionary fiscal policy will buoy residential construction, a sector we expect to outperform in ---- and over the first half of our ten-year forecast. ...

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